Counterparties: Not so golden, still delicious
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Appleâ€™s stock is down 23% in the last six months. Last weekâ€™s earnings report caused an overnight drop in shares from $514 to $461. Earnings growth is decreasing. Investor Jeff Gundlach thinks itâ€™s a â€śbroken companyâ€ť where innovation has been reduced to â€śjust changing the size of… productsâ€ť. Fast Company explains â€śWhy Apple is losing its auraâ€ť while the WSJ asks â€śHas Apple Lost its cool to Samsung?â€ť
Not so fast. Legendary VC Michael Moritz, who first bought Apple equity in 1978, has stepped into the doomsaying to decry the lack of â€śany sense of perspectiveâ€ť. Quarterly revenues, he notes, grew 18%, and topped $50 billion for the first time. And while Apple does face stiff competition, itâ€™s only because it is so successful:
Almost every company in the world suffers from acute Apple envy. Apple has thrown several mainline industries, including music, movies, television, publishing, cameras and 35mm film, into convulsions… It is difficult to think of a company of the past 50 years whose influence and ingenuity have been as profound or widespread.
John Abell voices the nagging concern that Apple just doesnâ€™t tell shareholders enough about what itâ€™s up to. Thatâ€™s really nothing new: Steve Jobs was notoriously hostile to shareholders, and seemed to relish ignoring them. Tim Cook hasnâ€™t changed tack.
Itâ€™s not just more information some Apple shareholders want — theyâ€™d like management to be fixated on the stock price. In practice, that seems to mean a monomaniacal preference for buybacks as far as they eye can see, rather than investments in product development or the companyâ€™s supply chain. But Appleâ€™s view on this issue wonâ€™t change: Jobs ignored Warren Buffetâ€™s advice to use cash to buy back stock.
The difference between a CEO obsessed with products and an investor obsessed with finance, is the difference between Apple and Berkshire Hathaway. In turn, that might help explain why, as Farhad Manjoo writes, â€śthe market attitude toward Apple seems unmoored from its actual performanceâ€ť. — Ben Walsh
On to todayâ€™s links: